If interest rates are forecast to rise and a company has achieved a positive ARBL this means:
A) it is disadvantaged if interest rates rise.
B) it can benefit in the short-term if interest rates increase.
C) its profits may be adversely affected.
D) it has a negative impact on its profit margins.

Question

Quizplus · Accepted Answer

A positive ARBL means that a company has a higher inventory turnover rate than the accounts payable turnover rate, indicating that it can generate cash from its operations relatively quickly. If interest rates rise, the company may benefit in the short-term because it can invest the cash generated from its operations at higher rates, which can increase profitability.

If Interest Rates Are Forecast to Rise and a Company